Netmeds in talks to buy medicine delivery startup Pluss

Pluss, which was founded in 2015 by Jain, Madhulika Pandey and Tarun Lawadia, had raised about $1 million from IDG Ventures and other investors in November.Biswarup Gooptu | ET Bureau | October 05, 2016, 09:19 IST

NEW DELHI: Chennai-based online pharmacy Netmeds is in late-stage discussions to acquire on-demand medicine and healthcare products delivery service Pluss in an all-stock deal, with the merged entity looking to potentially take on market leader 1mg.

The transaction, which could close in the next two weeks, is expected to see Gurgaon-based Pluss’ existing backers, a list that includes IDG Ventures India, Singapore-based M&S Partners and Powerhouse Ventures pick up stakes in Netmeds, according to two sources with knowledge of the deal.

Both Pradeep Dadha, chief executive of Netmeds, and Atit Jain, chief executive of Pluss, did not respond to email questionnaires sent by ETat the time of writing this article. ET could not verify the exact value of the deal, or the stake that could be acquired by the Pluss management and its backers, post the buyout.

Pluss, which was founded in 2015 by Jain, Madhulika Pandey and Tarun Lawadia, had raised about $1 million from IDG Ventures and other investors in November. Prior to that, it had reportedly raised about $200,000 in seed funding from a number of notable angel investors, including Snapdeal founders Kunal Bahl and Rohit Bansal, as well as Anand Chandrasekaran, the new head of platform and partnerships for Facebook Messenger.

The startup has tied up with and aggregated a number of licensed local pharmacies under one service. Through its app, users can upload a photo of their prescription, and place their orders. Once confirmed, the startup’s delivery men purchase the medicines and delivers it to the customer’s address. It currently operates in the NCR and Hyderabad.

Netmeds, which was founded last year by the Pradeep Dadha Group, is a fully licensed pharmacy marketplace that offers authenticated prescription and over the-counter medicine along with other health products.

The Dadha Group, promoter of Netmeds, acts as a holding company for a number of businesses, including those operating in the digital publication, wellness, online jewellery pharmaceuticals and hospitality spaces, among others.

However, the broader Indian online pharmacy and medicine delivery services segment has found it difficult to raise equity financing, with investors shying away, due to a multitude of reasons, primary amongst them, regulatory opaqueness and lack of scale.

“Aside from regulatory concerns, there are also issues with margins. What would stop one of the ecommerce majors from adding a vertical. It’s a low-margin space with a lot of middlemen…Building tech as a differentiator has been a challenge,” pointed out Sanjay Nath, managing partner at Blume Ventures.

Amongst the few that have raised significant amounts of funding over the course of the last 12 months, includes 1mg, which raised Rs 100 crore in its Series B round in April, led by Maverick Capital Ventures, the venture capital fund affiliate of New York-based hedge fund Maverick Capital.

Prior to that, Netmeds too raised $50 million from healthcare-focused, mid-market private equity firm OrbiMed in October last year.

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